The violence marks the first major action taken by Myanmar authorities after weeks of escalating tensions, raising fears of a repeat of a 1988 crackdown when the military crushed a pro-democracy uprising killing thousands.
The witness said she had seen some monks beaten on the head as authorities tried to stop protesters gathering.
Monks are highly revered by Myanmar's majority Buddhist population.
"I think all the people of Myanmar must act to get democracy for a better life"
aprat_1992, Denpasar, Indonesia
Send us your views
Shwedagon is one of Myanmar's most important spiritual sites has been a focus on what, until Wednesday, had been peaceful protests.
Other witnesses reported seeing riot police beat their shields with batons as they chased some of the monks and supporters from the scene.
Defying government warnings thousands of monks and other protesters were taking to the streets undeterred on Wednesday, witnesses said.
On Tuesday the ruling military imposed a dusk-to-dawn curfew and banned public gatherings of five or more people.
|Riot police were deployed after weeks |
of escalating tensions [Reuters]
The move came after more than a week of anti-government protests led by monks across the country - the biggest expression of dissent in the country in almost two decades.
The first-known activist rounded up after the curfew was a popular comedian famed for his anti-government jokes.
Zargana was taken away from his home by authorities shortly after midnight, reports said.
Zargana led a committee that provided food and other necessities to protesting monks along with actor Kyaw Thu and poet Aung Way, whose fates were not known.
Internet access cut
Reports from inside the country indicated that the government had also cut off internet access following the curfew announcement.
There are also unconfirmed reports that Aung San Suu Kyi, the country's democracy leader and Nobel Peace laureate who has been under house arrest, had been moved to prison.
Although the protests have been peaceful they have sparked fears of a bloody crackdown by the authorities.
The protests were initially triggered by a massive hike in the price of fuel on August 19, but have developed into a more deeply-rooted outpouring of dissent led by groups of monks.
As police turned on monks near the Shwedagon pagoda, witnesses also reported seeing hundreds of soldiers and police deployed in Yangon in a city centre park near the Sule Pagoda, the focus of the biggest protests.
"They are in full battle gear and they have shields and truncheons. Since two or three days, you could see they are rehearsing anti-riot formations," a South-East Asian diplomat said of the troops deployed around the Sule Pagoda.
'Struggle for democracy'
Government vehicles mounted with loudspeakers have been patrolling Yangon's streets saying monks had been ordered not to take part in "secular affairs" and accusing certain elements of trying to instigate unrest.
|Armed soldiers have been seen at key |
sites across Yangon [Reuters]
The curfew order cited a legal clause which would allow the protests "to be dispersed by military force".
An estimated 50,000-100,000 protesters marched through the streets of Yangon on Monday in the biggest demonstration yet against the military government.
"The protest is not merely for the well-being of people but also for monks struggling for democracy and for people to have an opportunity to determine their own future," one monk told The Associated Press news agency.
"People do not tolerate the military government any longer."